Two experienced managers at Wilson Boat Inc are resisting th

Two experienced managers at Wilson Boat, Inc. are resisting the introduction of a computerized exponential smoothing system, claiming that their judgmental forecasts are much better than any computer could do. Their past record of predictions is as follows:

Week

Actual Demand

Manager’s Forecast

1

4,000

4,500

2

4,200

5,000

3

4,200

4,000

4

3,000

3,800

5

3,800

3,600

6

5,000

4,000

7

5,600

5,000

8

4,400

4,800

9

5,000

4,000

10

4,800

5,000

a. How would the manager’s forecast compare to a single exponential smoothing forecast using = 0.4?

Solution

Solution:

Formula :

F2= F1+ ^(A1-F1)

Wherein F2 = forecast of the 2nd week

F1 = Forecast of 1st week

A1= Actauals of the first week

^{= 0.4}

Similarly the forecast for the 11^th week will be found by using following formula:

F11= F10+ ^(A10-F10)

^{F11 = 5,000+0.4 (4800-5000)}

^{F11= 4920/-}

So the forecast for the 11th week would 4920/-